As the coronavirus pandemic is taking hold of the world, many different facets of society are diminished. People are getting laid off, businesses are collapsing and the economy is haltering. Yet, corporate governance doesn’t cease to exist, or even pause, as companies still require board leadership to move forward and survive. More now than ever. Leaders, such as chairs of the boards and CEOs, must evaluate their position and guide their companies – small or large – through these hard times. And they must continue doing so entering post-crisis. Lives and livelihoods are at stake.
Remote board leadership
Ever since many professionals in the corporate environment have been instructed to work from the comfort of their homes, a new phenomenon has started occurring; something we call “remote governance”. In other words, boards and CEOs are being forced to conduct their business through digital solutions such as video conferences or messaging platforms. And, unsurprisingly, this is being done without any particular bumps in the road.
Before, one might have believed that the conservative approach was a solid one. Why fix what’s not broken? Why change a winning concept? But the fact that remote governance works just as well as “close” governance proves to the world that it could easily be adopted outside of a global pandemic. Digital solutions like board portals and analytics platforms are now being used without hesitation, and without haltering the output of boards and CEOs alike. More and more professionals are realising that conducting business remotely and through digital solutions saves them time, money and effort – leaving them with only the job at hand.
We are hence, albeit unwillingly, entering a new era of governance. And it wouldn’t be the end of the world if boards and executives simply adopted remote governance as their default strategy, and then retained it well past the virus’s presence.
Some practicalities that board leaders may wish to consider:
Board portals and evaluation tools deliver several benefits over old-school paper-based communications without a mechanism for coordination and centralisation
Digital solutions offer directors a single place to go for information, eliminating the need to manage multiple communications delivered in hard copy or by email
More advanced solutions guarantee maximum cybersecurity and the minimisation of legal risks, shifting from human error to preparedness through analytics and data
Short and long term risks of remote governance
Of course, there are bigger concerns than only the immediate operational risks that emerge from the outbreak. We recognise that there are potential short, medium and long term consequences that apply as well. The chain of trade that exists between organisations is expected to take heavy short and long term casualties. For example, for a supply company, a delay in production which is an aftermath of the coronavirus (such as a shortage of healthy employees) could cause a ripple effect throughout the entire chain. Organisations that rely on this supplier would have to announce to the market that its operations are being severely hindered by the supplier’s delay – potentially causing a massive drop in share prices. We can expect this to occur more often than not in the next few coming years, even if the outbreak is under control within only the next few months.
Businesses face business continuity and safety risks every day. Staff and managers need to understand, prioritise and respond to relevant operational risks as part of their job. Strategic risks are escalated to the board for consideration and decision-making. If we accept that governance means to steer, to guide and to pilot (the original definition from Greek), and corporate governance is the means by which a company is directed and controlled (the definition proposed by Sir Adrian Cadbury in 1992), then the emergence of coronavirus is brought into context. Coronavirus is an external risk with strategic implications. Therefore, organisations need to understand its potential impact, consider mitigations and make decisions accordingly.